Corporate Social Responsiveness

Corporate social responsiveness refers to how business organizations and their agents actively interact with and manage their environments. In contrast, corporate social responsibility accentuates the moral obligations that business has to society. Responsiveness and responsibility can be viewed on a means-end continuum in that responsiveness can be shaped or triggered by public expectations of business responsibilities. Generally speaking, these responsibilities are implied by the terms of the social contract, which legitimizes business as an institution with the expectation that it serve the greater good by generating commerce while adhering to society's laws and ethical norms. From this perspective, corporations are in a dynamic relationship with society of which responsiveness is key.

Corporations actively interact with and manage their environments through various programs, policies, and procedures, which are formulated by top managers and carried out by other employees. Ideally, these processes of responsiveness are informed by long-term strategic planning, which starts with an assessment of the firm's external environment from which information about its constituents or stakeholders can be gleaned. To illustrate, this kind of assessment might reveal a trend that society has increased expectations that firms will enhance the quality of life in communities. A more fine-tuned analysis would identify the stakeholders who hold this expectation and the issues of importance to them. This information might prompt a bank to make a commitment to invest in community development projects aligned with the goals of local residents and aimed at generating goodwill befitting public expectations of corporate citizenship. In terms of strategic management, these projects would necessarily reflect the bank's formal policy toward community development carried out by employees in departmental programs guided by specific procedures, such as the criteria for approving [Page 517]loan applications. In this way, an awareness of environmental factors can prompt concrete changes in corporate responsiveness or the ways firms interact with and manage their social relationships.

While responsiveness ideally results from longterm strategic planning, it can also take the form of a more immediate reaction to a crisis. Whether a crisis results from an oil spill, product tampering, or another unexpected event, the conventional wisdom is that corporations should develop the capacity to anticipate emergencies and respond swiftly to the needs of adversely affected stakeholders. The case of Johnson & Johnson Tylenol poisonings has become a classic study of swift crisis responsiveness. In 1982, seven people died after cyanide was added to Tylenol capsules while they were on store shelves, prompting Johnson & Johnson, the maker of the product, to incur hefty expenses by voluntarily recalling and destroying remaining capsules. During this process, James Burke, the chief executive officer, made aggressive use of the media to apprise consumers of the steps that were being taken to address the crises. Shortly thereafter, Johnson & Johnson introduced tamper-resistant packaging as a preventative measure, demonstrating that crisis management involves not only swift responses and effective communication with stakeholders but also organizational learning.

Corporate social responsiveness is defined not only by a firm's policies, programs, and procedures but also by a firm's overall stance toward the environment. A constructive attitude is evident when corporate agents try proactively to anticipate stakeholder concerns and accommodate them whenever possible. That is, corporate managers can direct their firms to learn about the environment in which they operate and be attuned to it. In contrast, firms may exhibit a reactive or defensive posture toward stakeholders or may even neglect social issues altogether. Such attitude is apt to invite unwelcome criticism, unfavorable media coverage, stakeholder pressure tactics such as protests and consumer boycotts, and government intervention and oversight. In the first case, firms seeking to be attuned to stakeholder interests are fulfilling the spirit of the contract between business and society. In the second case of corporate neglect, this implicit contract is violated.

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